Claiming across multiple countries
A group with technical teams in two or more countries has one body of work and several rule sets. This guide sets out a single method for preparing the records once and feeding each country's claim from them, and the questions that decide which entity claims what.
A group with engineers in two or more of the seven countries has one body of technical work and several rule sets. Each scheme decides for itself who may claim, where the work must be done, how payments between companies are treated and what a grant does to the eligible costs. Preparing each claim from scratch multiplies the effort and produces schedules that disagree about the same project.
The method that works is to prepare one set of technical and cost records for the whole group, structured around the uncertainty and the people who worked on it, and to feed each country's form from that set.
What this guide covers
- Which entity claims.
- Where the work is performed.
- Contracted work between group companies and the intercompany agreement.
- Grants and other funding.
- One set of records serving several forms, and the terminology that does not travel.
Which entity claims
There is no group claim across borders. Each scheme is open to an entity within the charge to that country's tax that carries on the business and incurs the cost, for work that meets that country's definition and location rules. So the first question for every project is which legal entity employs the people, pays the contractors, bears the financial risk and owns the results. That entity is the candidate claimant, under the scheme of the country where it is taxed, and only for the part of the work it did or paid for.
Where the work is performed
All seven schemes care where the work was physically done, each in its own way (see the country differences table). So the shared record must hold the location per person per month, and where each contractor performed the work, not where it invoiced from. A time record without the location must be reconstructed before it can feed any of the seven claims.
Contracted work between group companies
When company A in one country pays company B in another to do R&D, both countries' rules on contracted-out work, connected parties, work done abroad, work done for another person, risk and ownership interact. The usual outcome is that B's claim is barred or reduced because it was paid to do the work for someone else, and A's claim on the payment is limited to a percentage, to the connected party's actual cost, or to nothing if the work was outside A's country.
- Write the intercompany agreement before the work starts. State which entity bears the cost, which owns the results, and where the work will be performed. Some schemes require the agreement to exist before the work is done, and all of them read it.
- Do not claim the same work twice. Decide which entity's claim each piece of work belongs to and record the decision. Where a scheme requires the payer to notify the performer that it is claiming, do it.
- Consider whether each entity should bear its own costs. If each entity funds and owns its own part of the work, each can often claim its domestic costs under its own scheme. That needs advice on both countries and a decision before the year starts, because records cannot be restructured afterwards.
Grants and other funding
A grant changes the eligible costs in most schemes, but not in the same way. Tag every grant to the project and the cost lines it funded, with the funder and the terms, so each country's treatment can be applied without reopening the grant file. The grants and subsidised expenditure module covers the mechanics.
One set of records serving several forms
Prepare these once, per project, in neutral language, and translate into each scheme's vocabulary at the form stage.
| Shared record | What it holds | Feeds each scheme's form as |
|---|---|---|
| Project note | The uncertainty, why existing knowledge did not resolve it, the field, start and end dates, the owning entity | The written description of the project or activity |
| Work log | Hypotheses, alternatives, experiments, results, dated and attributed | The work done and the systematic approach |
| People and location register | Each person, employer entity, hours by project by month, where they worked | Staff cost apportionment; domestic or overseas split |
| Contractor register | Each contractor, paying entity, connected or not, agreement date, where performed, who owns the results | Contracted-out and connected party costs at each scheme's percentage or limit |
| Cost ledger extract | Payroll, invoices and consumables by project and entity, reconciled to the accounts | Each scheme's cost categories |
| Funding register | Grants and customer payments by project and cost line, with terms | Each scheme's grant and funded work rules |
| Decisions log | Which entity claims which work; what was excluded and why | The exclusions list, and the answer when two authorities ask about one project |
Terminology that does not travel
The shared record uses neutral words. One country's terms in another country's form read as a sign that the claim was prepared elsewhere and not adapted.
| Country | The qualifying work | The costs | The filing | The authority |
|---|---|---|---|---|
| United States | Qualified research (the four-part test), per business component | Qualified research expenses | Form 6765, with the income tax return | Internal Revenue Service |
| United Kingdom | Qualifying R&D: an advance in science or technology by resolving scientific or technological uncertainty | Qualifying expenditure | The Company Tax Return, with an additional information form | HM Revenue and Customs |
| Ireland | Qualifying R&D activities | Qualifying expenditure | The corporation tax return, Form CT1 | The Revenue Commissioners |
| Canada | SR&ED | SR&ED expenditures and qualified expenditures | Form T661, with Schedule 31 for corporations | Canada Revenue Agency |
| Australia | Core and supporting R&D activities | Notional deductions | Registration, then the R&D tax incentive schedule in the company tax return | Department of Industry, Science and Resources; Australian Taxation Office |
| New Zealand | Core and supporting activities | Eligible R&D expenditure | General approval or criteria and methodologies approval, then the supplementary return | Inland Revenue |
| Singapore | R&D involving novelty or technical risk | Qualifying expenditure; enhanced deductions on staff costs and consumables | The corporate income tax return | Inland Revenue Authority of Singapore |
Illustrative example
Illustrative example. Meridian Sensors, a hypothetical group, has a parent in one country and a subsidiary in another, both working on one calibration project. Engineer time costs 400,000 in the parent and 100,000 in the subsidiary, and the subsidiary invoices the parent at cost plus a margin. In most of the seven schemes that bars or reduces the subsidiary's claim and limits the parent's claim on the invoice, possibly to nothing. Had the group agreed before the year started that each entity would fund and own its own part of the work, each would be a candidate to claim its own domestic costs, 400,000 and 100,000, under its own scheme, at each country's rate. The agreement and the records decide the difference, not the engineering.
Country differences
The country comparison sets the seven schemes side by side; the country pages give the detail.
| Country | Where the work must be performed | Contracted, connected and group work |
|---|---|---|
| United States | Research conducted outside the United States is among the exclusions. Contract research expenses qualify only to the extent the research is conducted within the United States. | Contract research: 65% of amounts paid for qualified research performed for you, under an agreement entered into prior to the performance of the research, where the taxpayer bears the expense even if the research is not successful. Members of a controlled group are treated as a single taxpayer. Research is funded if payment is not contingent on success, or if the taxpayer does not retain substantial rights. |
| United Kingdom | For accounting periods beginning on or after 1 April 2024, relief for contracted out R&D and externally provided workers is generally limited to work carried out in the UK; the restriction does not apply to the claimant company's own staffing costs. | 65 percent of payments to an unconnected subcontractor qualify; connected party payments are limited to the subcontractor's relevant expenditure. The merged scheme contains no restriction for subsidised or grant-funded expenditure. |
| Ireland | Expenditure qualifies where the R&D activities are carried on within the State or another EEA state, and the expenditure is not relieved against tax in another territory. | Expenditure on R&D activities carried on by an unconnected person on behalf of the company qualifies up to the greater of 15 percent of the company's own qualifying expenditure and €100,000, provided the person does not also claim. Expenditure met by grant assistance from the State, an EU institution or any other state is not qualifying expenditure. |
| Canada | Qualifying work carried out in Canada. Salary or wages for SR&ED carried on outside Canada by employees resident in Canada can be included up to 10 percent of the total salary or wages for SR&ED carried on in Canada in the year. | Only 80 percent of arm's length contract payments and third-party payments are included in qualified expenditures. A contract payment received reduces the performer's qualified expenditures, so the payer claims the credit. Qualified expenditures are also reduced by government and non-government assistance. |
| Australia | R&D activities conducted outside Australia are eligible only where covered by a finding under section 28C of the Industry Research and Development Act 1986 that the activity has a significant scientific link to Australian core activities, cannot be conducted in Australia for a listed reason, and overseas expenditure is less than Australian expenditure. | Expenditure is not eligible where the R&D activities are conducted to a significant extent for another entity, or where another entity bears the financial risk and effectively owns the results. A recoupment from an Australian government agency triggers a clawback adjustment. |
| New Zealand | Eligible expenditure on R&D performed outside New Zealand is limited to 10 percent of the total eligible expenditure for the year and must relate to R&D that is integral to a core activity performed in New Zealand. | The claimant must perform or commission R&D in New Zealand, control the R&D activities, bear the financial risk and effectively own the results. Expenditure on a contractor performing R&D on behalf of the claimant is eligible for the claimant; the contractor cannot claim for the same activities. |
| Singapore | R&D undertaken outside Singapore is deductible at 100 percent under section 14C where related to the trade, and does not qualify for the additional deductions under section 14D. | For R&D outsourced to an R&D organisation in Singapore, IRAS treats a fixed portion of the fee (60 percent) as qualifying staff costs and consumables. Expenditure met by a government grant is not deductible to the extent of the grant. |
Related pages
- R&D incentives by country
- In-House Finance Team Program, Module 4: Contractors and overseas costs
- In-House Finance Team Program, Module 5: Grants and subsidised expenditure
- Running a claim hub
Educational material, not advice. Eligibility and treatment depend on the scheme and the facts.
Sources
- 26 U.S. Code section 41, Credit for increasing research activitiesLegal Information Institute, Cornell Law School
- R&D tax relief: the merged R&D expenditure credit scheme and enhanced R&D intensive supportGOV.UK
- Taxes Consolidation Act 1997, section 766Irish Statute Book
- Income Tax Act, section 37Justice Laws Website, Government of Canada
- Income Tax Assessment Act 1997, Division 355Federal Register of Legislation
- Income Tax Act 2007, subpart LYNew Zealand Legislation
- Research and Development (R&D) expenditureInland Revenue Authority of Singapore
Educational content only, not tax advice. Rules change and eligibility depends on your circumstances, so check the official guidance or speak to a qualified advisor before you claim. See the disclaimer.